ETF Areas That Remained Strong In The First 9 Months Of 2020

The year 2020 has been quite a chaotic one and keeping the Nov 3 elections in mind, it seems like the situation will continue. President Donald Trump and first lady Melania Trump testing positive for coronavirus can escalate tensions among investors. Notably, concerns looming around the pandemic have largely dominated the market headlines, causing turbulence.

However, positive developments in coronavirus vaccine, Fed’s support, U.S. fiscal stimulus and a rebounding U.S. economy with an improving job market have kept investors' optimistic alive amid the crisis. Major technology companies showed resilience to the pandemic, which in turn, significantly supported the market momentum this year. In fact, Wall Street witnessed the best August for the indices of Dow and the S&P 500 since 1984 and 1986, respectively, after slipping into the bear territory in March.

However, even during the pandemic, investors continued to focus on opportunities for their portfolios cropping up from the new normal. Online activities have gained popularity among the masses during the past few months and are expected to continue dominating the post-pandemic era largely. The pandemic is also believed to have changed the lifestyle and preferences of Americans and people globally. For precautionary reasons, people are trying to avoid public places and maintain social distancing. Also, most people are opting for cash less transactions wherever possible.

Against this backdrop, we highlight some ETF areas that held their ground and gained popularity among investors:

AI, Robotics & Cyber Security

AI is fast changing the business landscape by expanding opportunities, driving revenues and enhancing efficiencies. It helps enhance almost everything, including advertising, healthcare, robotics, retail, video streaming, gaming and urban development.

We are living in an era largely dominated by AI applications and technological advancements. Amid the coronavirus crisis, demand for online services has increased, which in turn has led to the dominance of AI. Globally, the AI market is estimated to see a CAGR of 29%, rising from a worth of $42.8 billion in 2019 to $152.9 billion in 2023, according to an Analytics Insight article.

The robotics market is flooded with opportunities as robots are being used for jobs such as sanitizing hospitals, homes and workplaces along with monitoring, surveying, handling, and delivering food and medicines.

However, increasing adoption of these technologies is exposing businesses, governments and organizations to cyber risks. Given the severity of the situation, Cybersecurity Ventures expects the worldwide expenditure on cybersecurity to surpass $1 trillion cumulatively from 2017 through 2021. Per a Grand View Research report, the global cyber-security market is expected to reach a worth of $241.1 billion, at a CAGR of 11% from 2019 to 2025. Accordingly, our investors can consider Global X Robotics & Artificial Intelligence ETF BOTZ, First Trust Nasdaq Artificial Intelligence and Robotics ETF ROBT, ROBO Global Robotics & Automation ETF (ROBO), iShares Robotics and Artificial Intelligence Multisector ETF (IRBO), First Trust NASDAQ CEA Cybersecurity ETF (CIBR) and ETFMG Prime Cyber Security ETF (HACK) (read: Nvidia's Buyout of Designer Arm Put These ETFs in Focus).

Online Retail ETFs

Strikingly, even as the rebooting of the U.S. economy happens in phases and social-distancing restrictions are being eased, people are increasingly opting for contactless operations. Most of the surveys have found that people are more interested in online shopping rather than visiting a brick-and-mortar store for their purchases of essential food items and supplies now.

In fact, U.S. online sales rose 42% year over year in August, according to the latest Adobe Analytics data. The rise was however at a slower pace than July when online sales soared 55% year over year, per the Adobe Analytics data. Since March, Adobe attributes the pandemic to an extra $107 billion spent online. In fact, per eMarketer’s forecast, e-commerce sales are expected to grow 18% in 2020 to reach $709.78 billion, representing 14.5% of the total U.S. retail sales this year.

Against this backdrop, let’s look at some ETFs that can benefit from the new shopping trend -- Amplify Online Retail ETF IBUY, ProShares Long Online/Short Stores ETF CLIX, ProShares Online Retail ETF (ONLN) and Global X E-commerce ETF EBIZ (read: Stay-At-Home ETFs to Soar Further on New Lockdown Measures).

Video Gaming ETFs

It seems like there is no stopping video game players this year, with the health crisis forcing people to stay at home. Moreover, the boom in the video gaming space may remain in the post-pandemic era as the outbreak has changed the lifestyle and preferences of Americans to a large extent.

Going by new data from The NPD Group, the video game industry, including packaged media, digital, consoles and accessories, saw strong sales in August with people spending a total of around $3.33 billion. Notably, the figure is also up 37% year over year from $2.43 billion. In fact, August was the fifth consecutive month of an impressive rise in sales compared to the year-ago period. Sales of games and hardware rose 73%, 52%, 26% and 32%, respectively, in April, May, June and July. Year-to-date spending is now at $29.38 billion, 23% higher than the same period last year.

Thus, investors can look at VanEck Vectors Video Gaming and eSports ETF ESPO, Global X Video Games & Esports ETF HERO and Wedbush ETFMG Video Game Tech ETF (GAMR) (read: Video Gaming Thrives in Pandemic: 3 Top ETFs to Gain).

Clean Energy Funds

Alternative energy includes any energy source that acts as a replacement to conventional and non-renewable fossil fuel. These energy sources are also called renewables as they are continuously replenished through natural processes. Also, the green energy space has been a hot discussion topic in the ongoing U.S. election campaign.

According to the International Energy Agency (IEA), renewable energy sources are expected to make up 30% of the world’s electricity by 2024 in comparison to the current 26%. Per Allied Market Research, the global renewable energy market is expected to reach a value of $1.51 billion, at a CAGR of 6.1% between 2018 and 2025.

Thus, investors can consider the following ETFs -- iShares Global Clean Energy ETF ICLN, Invesco Solar ETF TAN, First Trust NASDAQ Clean Edge Green Energy ETF (QCLN) and ALPS Clean Energy ETF (ACES) (read: Sector ETFs to Win/Lose If Biden Wins Elections).

Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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